The Competition Commission of Pakistan (CCP) has issued exemption to a Joint Venture Agreement dated 15-06-2011 (JVA) between M/s Metro Cash & Carry International Holding B.V. (Metro) and Thal Limited (Thal) under Section 5 of the Competition Act, 2010 (Act). Metro and Thal filed a joint application before CCP for the exemption of JVA from application of Section 4 of the Act. Through the JVA, the Metro and Thal agreed to restructure their respective subsidiaries in Pakistan, namely M/s Metro Cash & Carry Pakistan (Private) Limited (MCCP) and M/s Makro–Habib Pakistan Limited (MHPL), respectively by forming two separate entities namely, OpCo and PropCo. OpCo will carry on the business of wholesale cash and carry distribution initially through the existing cash and carry centers; whereas the PropCo will own and manage, inter alia, the properties owned by MCCP and MHPL. The exemption was sought from the non-compete clause in the JVA that expanded the scope of restraint from the business of the Metro and Thal, i.e., “whole sale cash and carry” to include “retail operations”. Therefore, CCP deemed it appropriate to conduct a hearing in the matter. While considering the conditions mentioned in Section 9 of the Act for grant of exemption, the Commission observed that JVA will facilitate the growth of the wholesale business as the entities will be able to combine their resources and take advantage of the resulting economies of scale, thereby becoming more competitive and benefiting the consumers. The consumers may directly benefit from the proposed joint venture as OpCo will be able to provide goods to the customers at competitive prices by securing reducing price margins from suppliers and passing on the benefit to the consumers. Additionally, OpCo will also maintain strict quality control rules to ensure that the products sold, particularly fresh foods, are of a high quality. Accordingly, CCP issued exemption to the JVA with a condition that the non-compete obligation will only continue to have effect during the life of the joint venture. CCP since its establishment has examined approx 322 potentially competition-reducing agreements and issued exemptions on grounds of economic merit, with and without conditions, under gateway provision of law.
The Competition Commission of Pakistan (CCP) has issued exemption to a Joint Venture Agreement dated 15-06-2011 (JVA) between M/s Metro Cash & Carry International Holding B.V. (Metro) and Thal Limited (Thal) under Section 5 of the Competition Act, 2010 (Act).
Metro and Thal filed a joint application before CCP for the exemption of JVA from application of Section 4 of the Act. Through the JVA, the Metro and Thal agreed to restructure their respective subsidiaries in Pakistan, namely M/s Metro Cash & Carry Pakistan (Private) Limited (MCCP) and M/s Makro–Habib Pakistan Limited (MHPL), respectively by forming two separate entities namely, OpCo and PropCo. OpCo will carry on the business of wholesale cash and carry distribution initially through the existing cash and carry centers; whereas the PropCo will own and manage, inter alia, the properties owned by MCCP and MHPL.
The exemption was sought from the non-compete clause in the JVA that expanded the scope of restraint from the business of the Metro and Thal, i.e., “whole sale cash and carry” to include “retail operations”. Therefore, CCP deemed it appropriate to conduct a hearing in the matter.
While considering the conditions mentioned in Section 9 of the Act for grant of exemption, the Commission observed that JVA will facilitate the growth of the wholesale business as the entities will be able to combine their resources and take advantage of the resulting economies of scale, thereby becoming more competitive and benefiting the consumers. The consumers may directly benefit from the proposed joint venture as OpCo will be able to provide goods to the customers at competitive prices by securing reducing price margins from suppliers and passing on the benefit to the consumers. Additionally, OpCo will also maintain strict quality control rules to ensure that the products sold, particularly fresh foods, are of a high quality. Accordingly, CCP issued exemption to the JVA with a condition that the non-compete obligation will only continue to have effect during the life of the joint venture.
CCP since its establishment has examined approx 322 potentially competition-reducing agreements and issued exemptions on grounds of economic merit, with and without conditions, under gateway provision of law.
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